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Tesheira: CLF’s $20 bill obligation based on MOU

Monday, November 5, 2012
Former Finance Minister Karen Tesheira.

Former Finance Minister Karen Tesheira said yesterday that the legal obligation of the CL Financial to repay the $20 billion that the State has spent on group is not affected by the shareholders’ agreement signed in June 2009, because the obligation to repay is based on the Memorandum of Understanding of January 2009.


Tesheira was speaking in an interview yesterday in which she was dismissive of the view expressed by chairman of the Clico Policyholders’ Group in a Sunday Guardian article that the June 2009 shareholders’ agreement “places a three-year expiry date on the State’s ability to recoup taxpayers’ money.”


The shareholders’ agreement dealt with the management and control of CL Financial, while the MOU provides the legal basis for the recovery of assets, said Tesheira, who now lectures in civil law at the Cave Hill campus of the University of the West Indies. Tesheira said: “The MOU created a legal obligation for the CL Financial group to repay the Government of T&T for the financial intervention it made as a result of the systemic risk that the group represented to the T&T economy.


“The shareholders agreement came about to give the Government a mechanism by which it could exercise effective management and control of the decision making of the CL Financial board.” She said the shareholders’ agreement was ancillary to the legal obligation of the CL Financial group of companies to repay the Government, that the obligation resulted from the earlier agreement signed on January 30, 2009 and there is no end date to the MOU.


“That is a continuing obligation until the debt due to the Government is satisfied,” said Tesheira, adding: “The obligation to repay every cent of taxpayers’ money comes to an end when that money has been repaid, not on the occurrence of a date.” She said: “There is no expiry date to the MOU and I would be happy to be pointed to such an expiry date.”


Speaking about the June 2009 agreement, Tesheira described it as a necessary mechanism “by which the Government sought to get the CL Financial board to relinquish majority control and for control to rest with the Government for the benefit of the taxpayers whose money had been committed to this intervention.”


She said: “The Government needed to control CL Financial, on behalf of the taxpayers and the policyholders of the country, particularly after the Proman sale of Clico Energy Ltd assets and other issues that became evident with regard to the reliability, accuracy and timeliness of the information that the Government was getting from CL Financial. “The Clico Energy case symbolises the challenges that we experienced with CL Financial.”


Tesheira made it clear that she did not sign the shareholders’ agreement as she was out of the country mid-June 2009, but she was quick to point out that she tabled the Cabinet Note on the issue and took responsibility for it. “In any event, it was an agreement that had the blessing of the Cabinet of the People’s National Movement at the time and it was vetted by the then Attorney General, with whom I consulted, prior to it being signed,” said Tesheira.


John Jeremie was the Attorney General at the time of shareholders’ agreement, having been appointed to replace Bridgid Annisette-George on May 29, 2009—14 days before the agreement was signed. Contacted last night, former Attorney General said he was not prepared to comment on the issue.


In terms of the three year limitation on the original shareholders’ agreement, she said that the back in 2009 there was great opposition by the shareholders of CL Financial to sign an agreement with the Government, which would give control of the group to the State.


She said the CL Financial shareholders were persuaded to sign because of concerns about the need to maintain confidence in the financial system, the importance of there not being any public disagreement between parties and the feeling that three years was adequate time for the management of the conglomerate.


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